Steve Ballmer and Steve Guggenheimer: Build Day 1

STEVE BALLMER: This is a lot of fun. (Cheers.) Welcome to the beautiful, sunny northwest. (Laughter.) We thought we’d do this on campus this year; that seemed like a really good idea when we were going through the all-time driest summer in Seattle history. But, particularly to those of you who may have come from the east coast, we’ve got it a little better out here than folks back east, and our thoughts are with those who may have family back east or the folks who are dealing with some of the devastation from the hurricane. But we are very glad to have all of you here with us. We have thousands with us here in a big tent on the Microsoft corporate campus, and then of course many other tens and hundreds of thousands on the Webcast around the world.

I guess this BUILD conference was somewhat highly anticipated. We sold out in 53 minutes. So, if you are on the Webcast and you wish you were here, we apologize. Bigger, better venue — maybe not better — bigger venue next year.

I also think this is about the perfect time to be together. Windows 8, Windows Phone 8, and Microsoft Surface are all now really here. And we’ll have a chance to talk a little bit about what that means and what the opportunity is. We’ll have a chance to roll up our sleeves and get into it in a number of the breakout sessions with you, and I think all in all should be a lot of fun for all of our attendees.

Given that the great new products are here, the first question one might ask is: “Okay, Steve, how are they doing?” Well, today is Tuesday. Friday was the first day of sale of Windows 8 and Surface, and yesterday we announced Windows Phone 8 for availability later this week in Europe. So, there’s not a huge amount of data, but I thought I’d share a few things with you.

First of all, in just the last three days, we have sold four million Windows 8 upgrades. Four million Windows 8 upgrades. (Cheers, applause.)

The level of embrace from enthusiasts, from people who want to get out there is very, very high. And those are all individual users buying a copy or stores stocking shelves for what they see is the demand. We have sold, additionally, tens of millions of units to our corporate customers who can upgrade when they want to, but have no time pressure to do that anytime soon.

We went out and talked to a number of our partners, retailers, and hardware vendors and asked them, “What are you seeing?” From Mike Edwards at Staples: “Customers are excited to try out the new features of the hardware.” From Mark Slater at Dixons, the largest consumer electronics retailer in the U.K.: “Sales of laptops during launch weekend have been 20 percent ahead of their forecast.” From John Solomon at HP: “We’re excited about what we’re seeing from initial sales, and it looks to be good.”

So, I think all of the key markers are there, and perhaps most emblematic, just anyplace you go when you went to a Microsoft Store — we’ve got about 65 stores now open in the United States. The shot on the screen is our Times Square store at midnight. You saw a little bit of that in the video. But the level of enthusiasm, the lines that we’ve been seeing at the stores, yesterday back east little different. We’ve closed some of our east coast stores for the hurricane, but certainly the level of interest and enthusiasm and desire to learn more about the new line of Windows 8 computers and to see Surface has really been quite remarkable.

If you take a look at what people are saying, kind of what’s the tenor. Everybody gets a chance to read the Internet, but I think there were a few quotes that are worth mentioning that I would bring up here today. From CNET, “Microsoft Surface is hot.” From Geek.com, always a favorite here at Microsoft, “Ten reasons to embrace Windows 8 now.” From Associated Press, “Windows 8 to bridge the gap between PC and mobile devices.” And from Josh Topolsky from The Verge on Twitter, “Who would have thought that in 2012 Microsoft would be the company with the boldest phone and the software design?”

I think the level of enthusiasm we’ve seen for the new products has really been stunning. I was down yesterday in San Francisco for the Windows Phone 8 launch, and certainly the people in the room and the press response, I think we’re really resonating across the board with the work that we’re bringing to market.

And, certainly, I’m enthused, as enthused as perhaps any moment in our company’s history, for what the reimagination of Windows and our real step into the mobile world means for our company and our industry.

When we mark time here, I think about the biggest events since 1980 when I arrived here. The three big events were the launch of the IBM PC, that was really a biggie. The launch of Windows 95, which really brought computing into the mainstream and opened up the Internet with the first integrated browsers. And now the launch of Windows 8 and Windows Phone 8.

The opportunity to transform the kinds of devices we build, the kinds of applications that we create, the way we use the cloud has never been better than it is today. So, as we’re sitting here reimagining what we do, and our industry is rebuilding itself around new classes of devices and services, you, the developers in this room, are at the forefront of seizing that opportunity and being able to make it into something which is absolutely, absolutely fantastic.

At the Windows launch, we emphasized a few points which I think are really useful for everybody who is thinking about developing a Windows application to hear. Number one, with Windows 8, we absolutely have in our hands the best PCs, hardware, and software and service, the best PCs ever made. The best laptops, the best desktops, the best all-in-ones, the new tablet-meets-PC form factor, which I’ll show you a few of today. We have PCs that run on ARM processors in addition to X86. We have PCs that embrace touch in addition to keyboard and stylus.

With Windows 8, we built a generation of systems that embraces multiple roles: The PC and the tablet, work and play, keyboard and touch. The integration of a lot of the things which we love into a single device is an important theme of the Windows 8 generation. And I’ll show you some devices that emblematize that in various ways. Some of these things are tablets that flip into notebooks, some of them dock, some of them convert, some of them attach. There will be as much innovation in hardware form factor as there is individuality and desire in the customer base.

We built the kind of system which I think is important, both on the phone and on the tablet and on the PC, the kind of experience that is essential for this generation. It’s alive with activity, alive with the people and information that are most important in our lives.

Every Windows device can be personalized with your applications, your websites, the people you care about, the information that you’re interested in. It’s alive and active with information, and I’ll show you that in a minute.

And very individual to use with the power of the cloud and Microsoft account and SkyDrive, which lets us all channel exactly what each user wants on their own device.

With the launch of Windows Phone 8, the phone really enters, I think, in full fruition as a first-class member of the Windows family. The Windows Phones that we showed yesterday in detail are absolutely the phones you want to own if you own a Windows 8 system.

I’m going to say this a few times over the course of my talk, but literally there will be hundreds of millions of Windows systems sold in the next year, and people will own all kinds of phones who buy Windows systems. But if you want the best experience with your new Windows computer, the best experience, you’ll own a Windows Phone. If you want the experience which is most personal, you will buy a Windows Phone. And if you want what I now think we can argue is the most killer hardware, screen resolution, audio, camera, video screens, you will be able to find that in the Windows Phone form factor.

I go so far as to say that particularly on this personalization point, it’s been our magnetic north, our guiding light since we started the development of Windows Phone in earnest some four years ago. And when we set out to reinvent the smartphone, we didn’t really set out just to build a single, standard phone for all of us, we really wanted to build a phone that could be personal for each of us. Each of our interests, each of our desires for different size and texture and color and affordability. We really set out to build that phone and reinvent the smartphone. And with the range of Windows Phones that you’ll see in market over the next month, I think you’ll see we really made that come true.

In a sense, what these launches really do is they kick off the golden age of opportunity for all of you as software developers, the opportunity to do great applications. I’ll talk about making money and driving volume here in a minute, but the opportunity to build great applications is tremendous with what we’ve done with Windows 8 and Windows Phone 8.

Across PC form factors, from the largest screens down to the smallest screens, you can write one modern application and have it work in a scalable way with keyboard and mouse and touch and stylus across the spectrum.

As you’ll hear later today, we’ve made it very easy to share the code that you write from the PC form factor to the phone form factor. Very easy to share with common graphic systems and HTML support. And perhaps most importantly, the same cloud infrastructure, the same Microsoft account and the same SkyDrive backing these devices, PCs, and phones.

I will go so far as to argue that you can not only build popular applications, but the applications that you deliver on the Windows platform will be better applications than you will deliver anywhere else if you choose to marry the opportunities in the system to build your own live tiles so that the information in your applications is alive and personalized to the users of your applications.

If you choose to embrace a Microsoft account and make it very easy when someone turns on their Windows device or their Windows Phone device, they can log in and have an experience that you’ve personalized to them. If you roam and share and store the stuff from your applications in the back end infrastructure that they know so well with SkyDrive.

On Windows 8 you want to make your app not only alive and available, but much easier to use from a discoverability perspective. That’s one of the problems people have with applications today. How do I get people to find my app? Once they’ve found it, how do I get it in front of them where it should be on a regular basis, and how do I bring them back in the context of other activities that they’re doing? I think we’ve really built that in in a way that the consumer is going to love and that you as developers can really take advantage of.

And last, but certainly not least, I want to emphasize what we’ve done in IE10 in Windows 8. The upgrades to IE to make it very fast, very fluid, and very touch optimized really means you can build different and better and more exciting Web experiences on this full range of Windows 8 devices, and I want to make sure that we show you a little bit of that.

I thought the best way to do that was through a little bit of a demonstration. To demonstrate the products, not just kind of as-is, but I thought we should demonstrate them on some of the new hardware. Many of you have downloaded Windows 8, you’ve used it on what I would call Windows 7-generation hardware. I thought I would show you Windows 8 running on Windows 8-generation hardware.

I’m not going to show you every device that somebody’s built for Windows 8. I just picked a few that I thought would whet your whistle and help you see, because I think the creativity in your applications is a function not only of the software and the services and even the application experiences we build in, but also the hardware we sit on. They’re all springboards for your imagination and your innovation. So, I’m going to show you a few different devices.

I’ll apologize in advance. I thought I’d just do the demo myself on my personal account. I’m not a professional demo guy, I haven’t been for a while, but it’s all shipping software, so let’s see how it goes. (Laughter.)

I thought I’d start on a machine that is shipping, frankly, we just bought this company Perceptive Pixel, which makes this very large 82-inch Windows 8 slate. (Laughter.) This is an 82-incher. This is the kind you want to carry around and show your friends. (Applause.) Eventually, we’re going to have 82-inch slates at a price point where people can afford them and want to put them in a lot of conference rooms and classrooms and the like. But at least it will get you thinking about some of the scenarios that you can imagine.

So, here’s my lock screen. I’ve got my picture password enabled. And, boom, I’m in Windows 8. It’s just a big Windows 8 slate. It scrolls, it’s alive with activity. That should be obvious. Market’s closed today, so we’re not getting that information. There’s another busy finish on the PGA tour. People are tweeting in some language I don’t understand, but mentioning me in the tweet. (Laughter.) That’s got to be good. (Laughter.) I don’t know who this is, and actually I think it’s Greek, but it’s all Greek to me. (Laughter.) So you get a sense, it’s alive with activity.

I thought I’d maybe help you a little bit in terms of really being prepared for your couple days here on the Microsoft campus. This is the Microsoft campus on Bing Maps. In case you were confused, you’re in the state of Washington which is in the United States. Whoa, don’t want to go to Russia. (Laughter.) This is where we are. And we’ll just kind of zoom in. And you can see, this is the Microsoft campus. We’re sitting right about here right now. This would be a baseball field if you weren’t sitting here.

Your meetings today will be in this tent. They’ll be in our Building 33, and through the magic of bus service, across the freeway in Building 92. If you get lost or confused, you just come and we’ll spin you around inside the building and you can see anything you want on your 82-inch Windows slate.

Thought I’d give you another sense. Of course that would be a modern application running on Windows 8. Let me bring up OneNote, which is part of the Office family that essentially I manage my life in today. Very important to me. Here are the notes for the demonstration that I’m doing today. Here are all the PowerPoint slides. See, we had a great start. This actually got changed. This is now four million upgrades. Why is that important? That’s getting automatically roamed through SkyDrive so all these devices — we’ll come back to that later.

My demo notes — there was one thing I was worried about that I didn’t write down, which is that I’m going to be too long. Watch it. If we get to this note before I’m done and it still says “too long, watch it” and that clock is red, I’ll let you know.

So, these things have now been roamed through the cloud from the new Microsoft Office, which was written with touch in mind. We didn’t completely go to the modern interface, but we built touch mode in as a first-class citizen in the application so all of the Office applications — Word, Excel, PowerPoint, OneNote, Outlook, Lync, Access — they’ve all been redone to facilitate operation in touch and in pen mode.

Let me go ahead and lock this because, actually, it is my personal account. We’ll lock here real quick, and let’s go to the next system. This is a new Dell XPS system, 27-inch screen, also running Windows 8. And I thought maybe what I would do here is just show you some of the capabilities that we’ve built into Windows 8 for searching and sharing. These are all available as system services to all of you writing applications for consumers, for businesses. I thought maybe I’d just show them to you.

I swipe in from the right hand of the screen, and let’s just do a search. I was on stage yesterday at the Windows Phone launch with Jessica Alba, who is a new Windows Phone user. So, why don’t we go ahead and do a little search on Jessica Alba. I could use the on-screen keyboard.

One thing you can see is we have no apps yet in the marketplace on Jessica Alba. Let’s go to Xbox Video. And in Xbox Video, you can see there’s a number of videos that star Jessica Alba. Let’s see what we have on SkyDrive. On SkyDrive, it looks like I have a picture of me and Jessica Alba both holding up our Windows Phones. Excellent. Excellent to bring home after a long day. (Laughter.)

We look into email. And in email I find a note from a lady I work with, Jill. She thought Jessica did a great job at the Windows Phone launch today. Finance, our finance application doesn’t know anything about Jessica Alba. That’s because we don’t know yet about her new company, The Honest Company.

I could of course just go out to the Web. I just tap Internet Explorer and now I’m seeing. Now, what’s happened in each of these cases, as I tap, I’m using — I’m searching specifically in the context of the application. And any of you in your application, once it’s installed on the system, it can be available for people to search in a context-specific way inside your application. We’ve done that in IE and video and finance and mail, you can do it in your application.

We’ve written a new Bing application. The new Bing application can do search — you would expect it to — but I also have the ability to just drag the new Bing app to the side of the screen and then I can tab through various pages without losing my search results. So, these are just now open tabs in IE that have something to do with Jessica Alba.

Last thing maybe I’ll show you with search. Let’s go look inside the news application. These are all built into Windows 8. They’re all built inside Windows 8. There’s a nice — we’re still on the Web page — this is the news app. Go back. So, you go inside the news application, I can present any search term to our news app and it will go out and create a newspaper, if you will. This is a newspaper about Jessica Alba. You can see from yesterday, Microsoft brings out Jessica Alba to show off Kids Corner. I can drill into the article, which in this case happens to be a Web page. And now I can share that in context through the Share charm.

Again, each and every one of your applications has the ability to register with the system. You can share things out or you can allow things to be shared out through you. I’ll just share this out through email. I guess I’ll send it to my wife; that seems like a smart thing to do. (Laughter.) Very smart thing to do. I never leave the context, I hit send, and it’s gone. Very simple. Searching and sharing, system-wide capabilities. I showed them on this XPS system at 27 inches.

The last thing maybe I’ll do just before we leave this is I want to show you again how roaming and roaming user preferences can work. It works in the system, it can work in your application. So, I’m going to go ahead and change the lock screen. The lock screen currently is a shot of my son’s football team. I’m going to pick that nice picture of me and Jessica Alba. I could go up to SkyDrive, let’s do that, I could browse.

Let’s go up here and instead let’s look out on SkyDrive, see what SkyDrive has to offer. Again, any of your applications can participate. I’ll pick a picture. Maybe I won’t use the one with her, how about we change the lock screen to one of these nice Times Square shots? We’ll choose the picture and it will change then, immediately, the lock screen on this computer. You saw it already change on that computer. Automatically roam settings, your user settings, the information about your applications can work similarly, roaming across the various systems using the Microsoft account and SkyDrive back-end infrastructure.

Let me turn now to a little different size device, the smallest devices up here, which are the Windows Phone devices. These are just three of the devices that we had a chance to show yesterday. This is a 4.8-inch Samsung device, very personalized to me. Golf, Bill Gates — actually is shown in the video.

Here’s a very beautiful and thin and light HTC design: built-in amps, wide angle camera on the front for great Skype operation. Has built-in Beats Audio, very thin, very light design, very personalized.

Last, but certainly not least, one of the new Nokias with a beautiful — I have a little different personalization I’ve chosen for this device, but a beautiful screen with technology that lets this look good even in sort of the most vigorous sunlight. You can see I have my notes pinned right on the front. Let’s see here. There’s all the notes that I had a chance to show you earlier. I’ll just stop and synch them for a second. They are synching as we speak.

We will see the ink annotations, or at least we should see the ink annotations that I made earlier on this device. Here we go. There’s the ink annotation I made earlier about going to four million upgrades, automatically roam across all of my Windows devices through SkyDrive infrastructure, Microsoft account, and in this case the OneNote application. This is the kind of real-time, automatically, everything up-to-date operation that I think all of our customers are really going to want.

Let me turn next to this Asus Vivo machine. Looks like a very nice laptop, if you will, pretty thin, pretty light design. But in this case, the screen also detaches. And what you have here is a 1.15-pound — 1.15-pound tablet. This thing has an ARM Tegra processor, the phones have Qualcomm processors, the first two machines all have Intel Core processors. But you can see, very fast, very, very, light. I’m tempted to want to throw it to somebody in the front row. (Laughter.) But it’s logged into my email, so I’m not going to do that. (Laughter.)

I want to show you one other thing that I recommend you do in your applications that we did in our sports application that is built in. Here’s Bing Sports. I’ll go ahead and swipe down and let’s go to my favorite team. Anybody have a favorite team in any sport that they want to call out? (Audience yells.) Giants? Giants? I heard Giants. The Tigers? I’m from Detroit, I’ve already pinned the Tigers. So, let’s go ahead and add — a little hard to do upside down — oops, that’s not how you spell San Francisco. Where’s the A? Let me just type. (Laughter.) San Fran — oops, there they are. The San Francisco Giants. I’ll go ahead and select.

We’ll look at the San Francisco Giants. Aren’t they beautiful? Beating my Detroit Tigers right there. But now I can just swipe down and you’ll see at the bottom of the screen, a little thing that says, “Pin to Start.” So I’m going to click on “pin to Start.” It asks me to confirm. And now when I go back to the Start screen, you’ll see there they are, the San Francisco Giants. Alive with activity, personalized for the individual user. So, you see, it’s probably saying that they’ve won some games, that they’re good, that they’ve beat the Tigers a bunch of times. (Laughter.)

All of you in your own application can provide these kinds of deep links with the ability to pin to the Start screen with live information. That’s something that any developer can do and we encourage you to do it, and then let your users customize and personalize their Start screen with the information alive from the applications that you choose to build. So, that’s the Asus Vivo. As I said, it’s only 1.15 pounds detached. It’s a brilliant little computer in many, many ways.

Here’s the Microsoft Surface. (Cheers, applause.) The Microsoft Surface also is based on the Tegra processor from NVIDIA, as is the Vivo. You can see Microsoft Office is included with both. I’ll go open up Microsoft Word and if I can not block the camera — I am not a touch typist. I’m not a touch typist in any environment. So, you’re going to see me type in my real form. It is not the keyboard. There we go — brown cow — I also look down — jumped over — you get it, et cetera. We’re not going to put up with that much longer.

But what we have in the Surface is probably the best expression of the PC meets the tablet, the PC meets the tablet. You can see it’s great for work — Word, Excel, PowerPoint, and OneNote are built in. But it’s also good for play. One of the things that we built into all of the Windows 8 devices and all of the Windows RT devices is Xbox Music.

So, I’ll start Xbox Music and with every Windows 8 device, you get free streaming of music as a feature of every Windows 8 computer. So, give me the name of something, and let’s see how well we can stream it. (Applause.) (Audience yells names.) Pardon me? Boy, I couldn’t hear that. How about we go with “Power?” That’s a song that probably doesn’t have lyrics that are appropriate. Give me another one. Give me another one. (Audience yells names.) “Free Bird?” Oh, man, now you’re going to make me go with an oldie or something because it’s all I know. How about we use “Beautiful Day.” I can get that typed eventually.

“Beautiful Day,” boom, we do search through the Search charm. You can see we have artist, album, songs — let me just go ahead and play “Beautiful Day” from Xbox Music. (Song plays.) (Applause.)

Let me unplug the audio jack, though, and just give you a little bit of a sense. We’ve had the built-in kickboard. This device ways one-and-a-half pounds. And partly because we really wanted to make the battery great for all-day operation and to build in a kickstand that lets this be a tablet, a notebook, and a freestanding tablet. So, if I want to quit, I close, I close, and I leave. (Laughter.) Just that simple. Microsoft Surface. (Cheers, applause.)

Next I thought I would show you a machine that will launch in the next few weeks. This is the Lenovo ThinkPad Tablet 2. This, too, is super light. It’s 1.32 pounds, which makes it lighter than a Surface, not quite as light as the Vivo. But it runs the Intel Atom processor. So, it literally runs every piece of software ever written for Windows. It runs all Win32 applications, not just a few plus modern applications, it is just like the first two big machines that I showed you in terms of the application set that it runs.

So, I can bring up Microsoft Outlook, if you can get a shot of that. I can tab through, this is actually my email, so I’ve got to be careful what I touch on. (Laughter.) How about this one? Just information, things that are going on. This is the new touch version of Outlook. It runs all of the Windows 8 software, but let me just bring up, again, Microsoft OneNote. So, in this very, very thin and light package, I also have a built-in stylus. I can take notes. Let’s go look at those PowerPoint slides.

You, again, see the four million upgrade annotation that I made on the big board and I can go ahead and do additional annotations — I’ll probably just write down, “BUILD rocks.” And there it is. BUILD rocks. And now that will roam through. And when I get back to my desk later on today, I will probably delete that with no prejudice to the audience here, I just want to keep my notes clear and simple.

But you get a sense of what SkyDrive, roaming account can mean in the hands of a great application. But this runs absolutely everything. It is based on the Intel Atom processor, it will be available in the next month.

The last machine I want to show you is actually the one that perhaps has been most, to my surprise, surprising people. And it’s one in a class of many, but this happens to be the Acer Aspire S7. You can get it with an i5 Core processor or an i7 Core processor. It weighs 2.38 pounds. That’s all. 2.38 pounds. See if you can get a shot of that. It is a very thin, very light notebook, again, running — if I don’t turn it off with my hand, which I just did — running Windows 8.

It is also all touch-based. You say, “Do people really want to use touch laptops?” Touch laptops really are cool. I had a group of leaders of companies down in the Bay Area together for dinner the other night. And they were just sitting there saying, “Really? You mean I can just go touch my laptop? Really? I can just go point and things happen? Really? I can just flip through like I would on a tablet?” And the answer is: Absolutely, yes.

I think this machine itself and other ones like it from other manufacturers is probably exactly what this crowd of people will want as software developers. In fact, we went ahead and installed Visual Studio on this machine with a Core i7 processor, this is as good a machine on which not only do to your testing and targeting, but also to do your software development. It is something that you get in our world that we don’t have in some of our competitors’ worlds is the ability to develop and test and host all on the same machine.

The last thing I thought I would just show you briefly was the new MSN for Windows 8. This is a website, this is not an application, but it is a website that was really written optimized for IE10 and optimized for touch. So, you get a sense of just how fast and fluid a website can be. You know, I can click in — I don’t know what the headline article is, something about basketball here. I go ahead and I click in, but I have regular Web advertising. These are just Web pages with a constant look and feel that’s similar to Windows 8, but in a touch notebook form factor.

I encourage you to have a chance to check out not only the machines that I showed you here today, but to check out a broad variety of machines that you’ll find at the Microsoft Stores, the Best Buy stores, and other stores near you where you look for electronics.

Search, Share, Microsoft account, SkyDrive, Live Tiles, live activity, just some of the things that I tried to highlight for you in these applications which you can also do in your own applications.

In case it wasn’t clear, we’re all-in with Windows 8. Every group in Microsoft has contributed some content, an application, some first-class experience that’s been optimized for Windows 8, Windows Phone 8, and touch.

I thought I would show you a little video that just has some snippets of what the Xbox team is doing so you can control your Xbox from your Windows Phone or from your Windows 8 system and some of the kinds of new experiences that people will write for Windows 8 that work in conjunction with Xbox-powered TVs. So, roll the video, and then when we come back, Steven Guggenheimer will come up and talk to you more about what’s going on in application development outside of Microsoft. Roll the video, please.

(Video: Xbox.)

STEVE GUGGENHEIMER: (Applause.) All right. All right, thank you everybody for joining us today. On behalf of the developer team and the platform evangelism team, we’re really glad to have you here.

My name’s Steve Guggenheimer. Most people call me Guggs, Steve is the other guy that was on stage, and we don’t like to be confused — at least I don’t — and Guggenheimer is a little hard to pronounce.

I’ve been around Microsoft for about 18 years, and I spent the last five years working on the hardware ecosystem. All the OEMs, ODMs, and really helping bring what I think is an inflection point in the hardware industry to life with Windows 8.

Now, the thing about the hardware ecosystem is it doesn’t come to life until the software is there, and the applications you build and what you do really brings the hardware to life, that’s the marriage of hardware and software.

You’ll have more opportunities this week to see all the PCs on these back tables. There’s Acer, Asus, Sony, Toshiba, Dell, HP, Lenovo, Samsung, they’re all there and they’re phenomenal, different devices.

I want to take just a few minutes now and sort of tee up this week. There’s literally hundreds of sessions, you guys are going to dive in deep. I want to show you a few applications that people have been working on and how they bring to life that marriage of hardware and software and services in some cases.

So, I’m going to start off, Steve showed off the new Surface device, so I’ve got one here. I’m going to bring up a game called “Agent P.” Okay, this is a game built by Disney. Disney has a lot of attributes, as you can imagine, in content. This comes from their “Phineas and Ferb” show. If you have a kid between I’d say about seven and 12, you’ve watched a lot of this in the background. Mine are 14 and 15, so I went through about three years of this. Very popular game, I think it is the number-one title on television today in the animated series.

Very simple game that’s kind of fun. You basically go around. Agent P’s job is to rescue the other agents. So, basically you sort of collect coins for a while and then at some point you run into a robot, you rip his arms off, you shoot the robot down. After you shoot him down, you go and unleash your friends who were stuck in cages. They actually kennel train the other agents as well, I learned in this game.

Now, the nice thing with Windows to start with is obviously Disney has a lot of HTML JavaScript code around. They’ve done a lot of websites, they’ve done a lot of applications and games, so they were able to take an existing set of code and very quickly bring this to Windows 8.

They really like Windows 8 because with the hardware acceleration they got a great experience. As you can see, super responsive game, fun to play with, easy to build. But the nice thing, then, is you get that marriage of hardware and software in the things that come along with Windows.

So, first thing I’m going to do is I’m going to take this Surface device and I’m going to click in, as the ad says, and you’ve probably seen that one by now, and immediately now I’m playing “Phineas and Ferb” on the keyboard. So, I can do that. If I press the space bar, I can bring up my shield and that’s how I rip robot arms off, just in case you wanted to know how to do that. So, good stuff.

But let’s take this a step further. With the Windows ecosystem, there are literally hundreds of thousands of devices you can plug into the hardware, and that actually leads to millions and millions of peripherals. Now, here’s a good example, a game controller. I can take this game controller on this Windows RT device, I’m going to plug it in the USB port. I’m going to give it a second or two to register. You’ll see in the Xbox the green ring sort of takes a second as it recognizes. Immediately, I can take advantage of this peripheral and now I can play “Agent P” here with the Xbox controller. (Cheers, applause.) Thank you. Literally just a little bit of extra code to do that.

Let’s take it a step further. This device, I’m actually running the screens off an HDMI out. So, take this tablet, any category of Windows tablet, I can now take this thing, hook it to my television or my screen with an HDMI out, now I can sit there with my game controller, my tablet, and the television and be playing. Very cool experience, and this all comes built in in terms of that output.

One more step. Now, something that kids would do in terms of services, sort of mixing and matching services and software. What kids might do, and I know mine would, they’d go in and they’d pull up Skype, right? Our Skype team has rewritten Skype from the ground up, used C++ as the core because you need a really robust system when you’re handling literally hundreds of millions of users. But also HTML on the front end to make a good, rich experience.

I’m going to call Gulnez (ph.) who is backstage, she was one of our students evangelists who is now working at Microsoft. Nice little transition there. Wait for Gulnez to come up. Hi, Gulnez, how are you?

GULNEZ: I’m good, hey, Guggs, how are you?

STEVE GUGGENHEIMER: Good, good. I’m going to use you for a little demo, so you just hang on. She’s going to type some emoticons in the back and you’ll see how those sort of render on top of the screen, which is real nice.

But what I’m going to do is I’m going to bring this down. I’m going to dock my Skype session. Then I’m going to go back to start. I’m going to bring the game back up. And now in the same screen, right, I’ve got my game I’m playing, I’m monitoring out to the big screen, I’ve got my Skype session, this is exactly what your 12-, 14-, 15-year-old kid is going to want to do. (Applause.)

Let me switch the camera around. Camera is facing you now. So, really cool marriage. Software, services, hardware together, takes the best of some of the existing code. Disney has not just this application coming, they’re working on “Where’s my Water,” we’re working on a couple of other titles, they’ve got a lot of content. So, a great example taking some of the existing HTML JavaScript they have today, bringing it to Windows 8, mixing, matching hardware and software and services for a great outcome. Really happy with what they’ve done, we’re really thankful for the work there.

Let me switch gears now. Let’s go to the exact other end of the spectrum. We’ll move away from the kids playing games, and let’s go to code that already exists. There are literally, again, hundreds of thousands — millions of Windows applications already built, they all run on Windows 8. This is a Windows 8 all-in-one. This is sort of a special all-in-one. This one is running, in this case, Autodesk, this is the AutoCAD program. Running it as is, keyboard and mouse set to go.

This machine is an HP Workstation. And what HP did is they took their Workstation and turned it into an all-in-one. So, instead of having a big rig on the side, it’s all here in the machine. In fact, to show you that, I’m going to lay this down. One of the cool things about this one is actually I can open it up while it’s running. And you can see, the Quad Xeon processor, it’s an NVIDIA high-end card, I can actually pull that optical drive out, hot swap it. So, it’s truly a working-class machine. If I move the mouse around, you see it’s still going. Very cool. All of your existing Windows 7 applications just run. There are lots of different ways and form factors you might run them on.

Now, this is an example as a developer, you know what? I turn that application immediately over to something that would run in touch and do everything else with. I might do the touch upgrades, but I might not rewrite the whole thing.

So, what Autodesk did is they said, okay, how can I build a complementary application? How do I sort of marry what I already have with something new?

So, I’m going to move over to this new Sony Vaio. This is, again, some of the new class of machines. And what I’m going to do here is first I’m going to pull up the same app, right? So you can imagine I leave my work studio, my design studio, whatever you want to call it. I go out, I’m going to go see a customer, I stop by the coffee shop. Of course I can use this machine like any other laptop and I can be editing and working away.

Now, of course I could grab the file from SkyDrive so I never had to go and save it or take a thumb drive around, it’s on SkyDrive and I just hook that into the application. I go to open, let me see if I can grab that. You’ll notice there’s the SkyDrive and I can go into my Autodesk app, that part is pretty easy.

Now, when I go out to see the customer, I might not want to sit there with my laptop open, you know, trying to work on AutoCAD here, have them over my shoulder. That might not be a great interaction mechanism.

So, what we’ve done is first off I’m going to lay this down. I’m going to switch to a sketch application. Right? Now the Sony comes with this active capacitive pencil. What Autodesk did is they built this sketch application, which is kind of the perfect thing to sit there with a customer, and I can take notes, it’s got a real nice pen here. If I wanted to do some coloring, I could pick a paintbrush and I could color in some of the things. So, this is an example where I take an existing application, whether I build a complementary service or complementary application like this, it’s a nice way to bring together the two worlds, and I get that differentiation point.

I met with a bunch of financial services companies in New York last week. And several of them are thinking that way. How do I take sort of some back-end processing and stuff that we do for a living, but build a nice front end that’s easy to do, take advantage of HTML and JavaScript and what I can do in the UI and really build something that helps my application differentiate?

So, sort of opposite end of the spectrum, a lot of fun. By the way, so I don’t forget, because I did earlier, that “Phineas and Ferb” app, just real quick, I’ll pull up my phone. If I wanted to play that same application because, again, it’s sort of the same JavaScript HTML engine, I can actually run that same application on the phone here. So, you can see off I go. And so, again, with very little work, able to port the application to the phone. So, again, I’ve got all the capabilities. I cut across all the devices. I can go from sort of big devices into portable devices. I can go from my portable device to the phone, it all works very well together.

Now, the last thing I want to do is talk a little bit about economics and monetization. Right, this is another one of the RT slates, this is a Samsung slate. There are a couple things we’ve been working on. First off, with the store itself, which is now open in Windows 8 and Windows Phone 8, you have the opportunity to build your applications and put them up there. You can use your own economics engine in Windows 8, but at the same time if you use our engine, 70 percent of the revenue goes to you on both the PC and on the phone, and then on Windows 8 and Windows RT, when you get to $25,000, that percentage goes to 80 percent from then forward. So, you get phenomenal opportunity in terms of core economics. And, again, you can use your own engine if you want for economics, in which case you take 100 percent.

Now, that’s part of the opportunity, just selling applications in the store. But we’re starting to do more learning around commerce in terms of in-app advertising and in-app sales.

So, let me go to both examples. Let me go on this device here. Let me go to travel. I’m going to take one of the Bing apps here. And you’ll notice as I scroll all the way over to the right, there’s an app sitting there on the right side. And we’ve done a lot of work in terms of understanding how to build, I’ll just say, a tile into an application and that’s an ad that can be resold. Our advertising engine supports that. If you use Visual Studio, you can hook it in directly. And of course you could use your own in-app advertising as well.

So, getting smarter and better about how we do advertising in apps is going to become important. When I go out and talk to developers who have written, you know, websites that they monetize today on PCs, part of the learning that’s going on on mobile devices is how when I turn that into an application do I monetize it and does it do as well, how do I do as good a job?

So, one of the things we want to do with Windows is, we have all these form factors, is allow not just the traditional website advertising, but both in-app ads using your own ad engine or our ad engine, or in-app commerce.

So, I’m going to go back to the main screen here and I’m going to pull up “Fish With Attitude.” Some of you might be aware of this game. If you have kids and you unlock your credit card, there’s a lot of learning you can do about how quickly kids can spend money. (Laughter.)

I’m going to go into the store here. And what this app allows you to do is use real money to buy, in this case, treasure to be used in the game. So, if I want to go buy the chest of pearls, I’m going to go in here. It’s loading, and you’ll notice here I can use the Microsoft payment engine. And the Microsoft payment engine is available for end users in about 200-plus countries and 100-plus languages. As developers, you get paid out in about 80 different currencies and submit in about 140 different countries. So, there’s a huge global opportunity there.

But there are third parties. So, one of the things PayPal has done is they’re building the opportunity to use PayPal and the API set so you can actually use PayPal from within an app, and you can see it’s up and running here. In the next couple of weeks, it will be released for you. So, now you can use our in-app commerce engine, you can use PayPal, you can use your own in-app commerce engine. So, if you look across the spectrum, phone to Windows 8 to Windows RT, right, paying from the store using your engine, using ours, in-app advertising in-app payment, we’re trying to cover the broadest spectrum and really give you the opportunity to monetize and make money off of all these phenomenal platforms that are coming, literally 400 million or so PCs that will ship this year or hundreds of millions that will ship plus people upgrading. So, a lot of good work there, a lot of opportunity.

The last thing I want to do is bring up one more application. You know, one of the things Steve talked about was reimagining Windows, reimagining the hardware. We are starting to see developers starting to reimagine their software and their applications.

So, the next application is one developed by somebody who has a phenomenal set of assets in scorekeeping or scores in video content, in magazine content. And what they did is they started from the ground up in terms of how could they take all of their existing assets and build a brand new application? That application is ESPN. I’m going to invite Michael Bayle to come out here and join me because I think he’s better suited to show this off. Hi, Michael, good morning. (Applause.)

MICHAEL BAYLE: Thanks, Steve.

STEVE GUGGENHEIMER: Thank you, thanks for joining us today.

MICHAEL BAYLE: Good morning. Thank you very much.

STEVE GUGGENHEIMER: You know, I got a chance to look at this, can you show the audience the new ESPN application?

MICHAEL BAYLE: Absolutely. We are super excited to be here. What an amazing event. I actually believe we can host an NBA expansion team in this very tent in the off chance that Steve might be looking for a location. (Laughter.)

So, as Steve mentioned, I wanted to spend just a minute with you all walking you through our Windows 8 journey and to introduce you to our ESPN app for Windows 8. At ESPN, we share Steve’s passion for sports fans, in striving to provide them the content, the multimedia-rich information they seek anywhere, anytime, and on any device.

Today, if a fan wants to access our realtime SportsCenter, we have that application. However, if fans want to access our news, in-depth analysis, audio casts, photos, videos, they have to access it via our website. The new Windows 8 platform has offered us a chance to reimagine the user experience.

The ESPN app for Windows 8 will aggregate our content into one application, ScoreCenter, news, audiocasts, video, radio, and more all just a tap away.

Furthermore, our experience takes full advantage of Windows 8 platforms using functionality like Snap view, semantic zoom, Live Tiles, and deep pinning, we are putting that user in control, providing a personalized experience that is uniquely their own.

The new ESPN app for Windows 8 will offer fans an unparalleled sports experience, and without the collaboration with Microsoft, we could not have done this. With that, I am thrilled to give you all a first public look at the ESPN app on Windows 8. By the way, much of the content you’ll see is powered by our new APIs, many of which are publicly available at Developer.ESPN.com.

As soon as you launch the app, fans are going to see a completely personalized hub experience, synched with their ESPN preferences with instant access to scores, headlines, and highlights. We’re giving fans a deeper sports experience than ever before. With the ESPN magazine, a suite of ESPN podcasts that can be played throughout the app, and extensive photo galleries. We’re able to put all this content in one place via deep pinning of specific sports and teams.

Browse the whole app, or with semantic zoom, go straight to the content you care most about. Listen to your favorite ESPN podcasts including Mike and Mike, PTI, and the BS Report with Bill Simmons.

Global navigation makes navigating the app fluid and easy. Fans can follow real-time scores and stats at ScoreCenter. The Lead, on the other hand, provides fans the latest news as well as in-depth journalism from ESPN Magazine.

Statview allows the sports fans to follow the content no matter what else they’re doing. The ESPN app allows fans to follow what they care most about whether at work, on the bus, or at home.

As you can see, the ESPN app for Windows 8 is an all-inclusive app that gives access to information and leading content from the worldwide leader in sports. It’s our mission to serve sports fans anytime, anywhere, on the best possible platforms in the most innovative ways, and we’re excited to launch today the ESPN app on Windows 8. Thank you very much. (Applause.)

STEVE GUGGENHEIMER: Thanks, Michael. Thank you for joining us. I had a chance to play with that app last Friday. I’ll tell you, that thing is going to live snapped on the right side. It’s a great app.

Thank you all so much for coming. You know, our partners are starting to build some great apps, all of you are starting to build some great apps. You know, we’re really excited about what’s going to go on. Lots of sessions this week. The Microsoft campus is here to welcome you. We’ve got a lot of developers who are going to be around to help and they just want to interact. So, have a great time, thank you all for joining us, and we’ll see you later. (Applause.)

STEVE BALLMER: People like maps for this thing, and that’s kind of what I wanted to come back and talk to you about. Here are some of the applications being written or already in our store, which had its grand opening last week. In sports, ESPN, Sports Illustrated, FitBit, TBS is coming, Entertainment Weekly, Time, People Magazine will be out with Next Issue Media. Disney’s “Where’s My Water,” “Where’s My Perry,” and “Temple Run Brave” coming to the Windows platform. Travel, Expedia will come later this year. And two things I want to note that both have announced, SAP has said that they are bringing their applications to the Windows 8 environment and Dropbox just announced its intention the last few days to also bring its capabilities to the Windows 8 environment. And we welcome all of these software developers and many, many, many, may, many, many more in the audience here and across the Webcast.

I had a chance, as you know, to go backstage for a few minutes. I was checking out Twitter and guess what I found up there on Twitter today? Go ahead and click please. I found this tweet: Windows 8 needs a great Twitter app, so we’re building it. Looking forward to sharing it with you in the months ahead. This morning, Twitter announced that they, too, will move forward with Windows 8 development. I know we’ve spent a lot of time talking to them about the wonderful way to use Live Tiles, to use sharing, to use account integration.

One of the things I didn’t have a chance to show you is with the built-in people application in our system, and through the magic of what we call Live Connect, you can actually connect — at least some applications we have the ability to connect directly into the system. So, when I put my son or my wife and I pin them to my desktop, I can connect that to Facebook, to Twitter, to all of these sources of activity. And I think the work that Twitter announced this morning to bring the Twitter application to Windows 8 will be some of the kind of most important in terms of really highlighting and showcasing some of these modern capabilities that we had a chance to talk about earlier.

So, Twitter, SAP, and Dropbox all announcing today and joining with enthusiasm the kind of crowd that’s here in the audience today in terms of enthusiasm around Windows 8.

Why write for Windows 8? You can do better applications. You can put those applications across a variety of form factors, including the phone. You can have what I think are the best commercial terms on the planet, as Guggs had a chance to describe earlier. But at the end of the day, it also takes volume. You’re going to want to see the opportunity. Whether you’re writing an app as an individual developer or whether you work for a big company, whether you’re trying to do something that is for consumers, for businesses, whether you’re trying to do something that is ad funded or commerce funded or app funded — or not funded at all, just a customer service for your business for the people that it serves.

The key is that, in fact, a lot of people will use that application. We have an install base of 670 million people, machines on Windows 7. Windows 8 takes less resource than Windows 7. Every one of those 670 million is a potential Windows 8 upgrade. And as you said earlier in just the last three days, four million sales have moved that direction.

Second, we don’t know what will happen with the trajectory in the next year of the PC market. I think with the addition of Windows 8, with these incredible new form factors that are tablets and PCs, I think we’re going to see a lot of growth and vitality and explosion in the PC market. But if the PC market just stayed relatively flat to current expectations, there will be 400 million — 400 million new Windows devices that you can target with your application. Microsoft account, SkyDrive, Search, Share, Live Tiles, pinning — available, for sure, to another 400 million machines around the planet.

Windows Phone. I think most folks in the room know Windows Phone today is a small volume player. But we have the most differentiated approach to the market. We have absolutely killer hardware. There are just going to be a lot of those hundreds of millions of Windows users who really want a Windows Phone. And so I think the opportunity there is also excellent.

On top of that, I make you a commitment. We will do more marketing and better marketing for Windows 8 systems, for Windows Phone — (Applause.) For Windows 8 systems, for Windows Phone and for Surface. You will see our best work, and you will not be able to pick up a magazine, go to the Internet or turn on a television set without seeing one of our ads really quite frequently.

This is a market that will explode. This is a market in which you can do your best work, your most innovative work, your most creative work. This is a market where you really have an opportunity to make money — to make money for yourselves, to make money for your company, to make money for your shareholders — whoever you are and whatever you do as a developer, whether you’re working in a big team or a small team, Windows 8 is the best opportunity for software developers today. Hundreds of millions of people just aching to use your applications, just dying to buy your applications, just dying to become involved with your company on a live, active, searchable basis.

I know the folks in this room must be interested or you wouldn’t be here. But I guarantee you, this will be the best opportunity software developers will see as hundreds of millions of new machines go out with the potential of billions and billions of new applications being sold.

So, I really want us to build together. We need your support. We need your commitment. You can count on us to stand behind the products and do whatever we can for you from a developer support perspective.

So, for those of you in the room, not those of you on the Webcast, for your extra effort and extra energy and to show you that you really have our full support, it is my pleasure to let you know that every BUILD attendee will get 100 gigabytes of SkyDrive storage for free. (Applause.) Come on. That’s 100 gigabytes. (Cheers, applause.)

Now you’re saying, “What’s with this dude? Does he want us to believe that he’s in?” (Laughter.) 100 gigabytes of SkyDrive storage, mwah! But I want the guy to show us he’s really in and he really thinks there’s a big opportunity. So, when you go pick up your 100 gigabytes of SkyDrive storage, which is a little card with a code on it, you’ll also have a chance to pick up a Microsoft Surface RT. (Cheers, applause.)

Hold on. Here’s the deal: You’ve got to make me two promises. Number one, please go out and write lots of applications. And number two, since you can’t pick them up until 7:00 tonight, stay seated and don’t run and start trying to pick them up now, okay? Thank you all, enjoy the rest of BUILD. (Cheers, applause.)